What kinds of taxes do I have to file as a pet sitter?
As a classified independent contractor (and unlike an employee), Hands N Paws does NOT deduct taxes from paychecks given. Therefore, you are responsible for paying self-employment taxes (filing a 1099) at the end of the tax year (as long as earnings from the tax year are at least $400). This is the FICA tax (15.3%) that funds Social Security and Medicare. Hands N Paws will send out a 1099-NEC to all independent contractors towards the end of the tax year. All who receive this form MUST file taxes accordingly on their 1040. As a self-employed worker, you will need to fill out two parts of your 1040: Schedule C and Schedule SE.
How can I pay less in taxes?
To help ease the tax burden once you file your 1099, we recommend utilizing tax write-offs to deduct from your income at the end of the tax year. That way, you can pay taxes on less income!
A tax write-off is an expense that a taxpayer may claim as a tax deduction. When it’s time to pay taxes, taxpayers calculate their taxable income. It’s possible to use tax write-offs to deduct expenses and lower this taxable income. Any expense that’s classified as a write-off must be typical for the industry and used to help a business to operate.
If you are utilizing tax write-offs, it is HIGHLY encouraged that you stay organized with your business expenses, since NOT tracking can result in you unnecessarily losing money at the end of the tax year once you file. Also, staying organized means you will likely prevent yourself from wasting tons of time trying to scramble to find/remember all expenses when it comes time to file.
The easiest and most automated way to track your expenses is through a recommended app called Keeper Tax. If you have any questions or concerns about taxes, this is a great resource to help you. You can even talk to an accountant for free on their website!
Keeper Tax 101
Keeper Tax allows you to keep track of tax write-offs through a credit card and/or bank account linkage. Then, when it comes time to file taxes, you can do so right in their app! It costs around $16 a month (for monthly plan; annual plan is $14/month). You even get a dedicated tax/bookkeeper to help with any questions you may have, and the entire expense-tracking process is automated. Learn more about Keeper Tax here.
Keeper Tax gives you a 7-day free trial period when you sign up with them. Should you sign up officially after the 7 days, please note that the monthly Keeper Tax expense that you acquire is considered a tax write-off/deductible!
Keeper Tax’s sign up process is super straightforward. To start, simply indicate that you are a 1099/Independent Contractor and go from there!
Once you’re signed up and downloaded the app, you’ll see there are four main navigations at the bottom of your screen:
- File Taxes
- My Keeper
Common Tax Deductions for Pet Sitters
Tax deductions (deductible expenses) are expenses that you use in your work that can be deducted from your income at the end of the tax year. This is what goes on the Schedule C portion of your 1040. Utilizing deductible expenses is beneficial because they can be subtracted from your income at the end of the tax year, meaning you’ll end up paying less in taxes because you’re paying on the difference (income – deductions = less taxable income).
Click here to see common deductible expenses for a dog walker. Some include:
- 🥣 Kibble or wet food
- 🦴 Bones and extra treats
- 🎾 Dog toys (tennis balls, chew toys, frisbees, etc.)
- 😸 Cat toys (squeaky toys, chase toys, etc.)
- 🦮 Leash and/or harness
- 💩 Poo bags (and dispensers!)
- 👢 Rubber boots for rainy walks or muddy check-ins
- 🚲 Bike and/or public transport expenses
- 🚗 Gas and other car expenses (oil changes, maintenance, vehicle depreciation, lease payments, etc.)
- 👕 Work shirts
- 👟 Dog walking tennis shoes
- 🧥 Winter gear
- 🕶 Summer gear
PLEASE NOTE: If you are deducting actual car expenses, you cannot deduct mileage as well. It’s one or the other! Please click here to learn more!
- If you didn’t purchase something for work, don’t deduct it from your taxes!
- If your tax bill is estimated to be over $1000 (use tax calculator here), then you should file quarterly taxes on the following dates below. There may be penalties that incur for not filing quarterly for larger incomes that have the expectation of doing so!
- 🌷 April 15th (First Quarter)
- 🏖️ June 15th (Second Quarter)
- 🍁 September 15th (Third Quarter)
- 🌲 January 15th of the following year (Fourth Quarter)